Explanatory Memorandum
(Circulated by authority of the Assistant Treasurer, the Hon. Stuart Robert MP)Chapter 4 Statement of Compatibility with Human Rights
Non-compliant payments
4.1 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
4.2 Schedule 1 denies an income tax deduction for certain payments if the associated withholding obligations have not been complied with. This will provide a greater incentive for employers and entities engaging contractors to comply with their withholding obligations.
Human rights implications
4.3 This Schedule does not engage any of the applicable rights or freedoms.
Conclusion
4.4 This Schedule is compatible with human rights as it does not raise any human rights issues.
Third party reporting
4.5 This Schedule is compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
4.6 Schedule 2 to this Bill amends Schedule 1 to the TAA 1953 to require that entities that provide road freight, IT or security, investigation or surveillance services must report to the ATO details of transactions that involve engaging other entities to undertake those services for them.
Human rights implications
4.7 The amendments made by this Schedule engage the prohibition on arbitrary or unlawful interference with privacy contained in Article 17 of the International Covenant on Civil and Political Rights (ICCPR). This is because entities that provide a road freight, IT, security, investigation or surveillance service will need to provide a range of personal information to the ATO that the entities collect in the ordinary course of business.
4.8 These reporting obligations are compatible with the prohibition concerning privacy, as they are neither arbitrary nor unlawful. In addition, they are aimed at a legitimate objective of ensuring that entities in the road freight, IT, security, investigation and surveillance industries comply with their taxation liabilities and are an effective and proportionate means of achieving that objective by requiring only the minimum amount of information necessary to identify relevant taxpayers and transactions.
4.9 The United Nations Human Rights Committee has stated, in their General Comment No. 16, that:
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- 'unlawful means that no interference can take place except in cases envisaged by the law. Interference authorized by States can only take place on the basis of law, which must itself comply with the provisions, aims and objectives of the Covenant [the ICCPR]'; and
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- 'the concept of arbitrariness is intended to guarantee that even interference provided for by law should be in accordance with the provisions, aims and objectives of the Covenant and should be, in any event, reasonable in the particular circumstances'.
4.10 The objective of requiring reporting by entities that provide a road freight, IT, security, investigation or surveillance service is to improve overall taxpayer compliance in these industries by gathering information regarding potential tax-related liabilities of taxpayers from entities that can provide it to the Commissioner without significant regulatory burden.
4.11 Legislative reporting regimes, such as third party reporting, provide more certainty and consistency of treatment for entities than the alternative, where the Commissioner collects information under his or her general information gathering powers on an ad-hoc basis. The information to be reported by entities under third party reporting is typically limited to the information they already hold that has been collected in the ordinary course of their business. Taxpayer information held by the ATO is subject to strict confidentiality rules that prohibit tax officials from making records or disclosing this information unless a specific legislative exemption applies.
4.12 The amendments allow the Commissioner to exempt entities from reporting where, for example, the Commissioner does not expect to be able to productively use the information or where reporting the information places a disproportionately high compliance cost on the third party relative to the benefit of providing the information to the ATO.
Conclusion
4.13 This Bill is consistent with Article 17 of the ICCPR on the basis that its engagement of the right to privacy will neither be unlawful nor arbitrary. Schedule 2 of the Bill therefore complies with the relevant provisions, aims and objectives of the ICCPR.
Taxing tobacco at the time of manufacture
4.14 These Bills are compatible with the human rights and freedoms recognised or declared in the international instruments listed in section 3 of the Human Rights (Parliamentary Scrutiny) Act 2011.
Overview
4.15 The Bills amend the Excise Acts so that an entity manufacturing tobacco goods under licence is liable for excise at the time of manufacture and the goods are taken to be entered and delivered for home consumption at that time.
4.16 A manufacturer must pay any excise duty payable on tobacco goods it has manufactured in a seven day period - the 'tobacco excise period' - on the first business day after the end of the period. To the extent any liabilities are not paid at this time, general interest charge under the TAA 1953 will apply.
4.17 Manufacturers must also provide the Commissioner with a tobacco excise return in the approved form for each tobacco excise period at the same time as any payment for that period would be due.
4.18 The Bills also amend the Excise Acts to clarify the obligations of manufacturers of tobacco goods to provide security and how excise duty applies to goods manufactured from components that were subject to excise or customs duty.
4.19 The amount of excise duty payable on goods manufactured from tobacco that has previously been subject to tobacco excise or excise-equivalent customs duty is reduced by the amount of excise or customs duty that has previously been paid.
Human rights implications
4.20 These Bills engage the prohibition on arbitrary or unlawful interference with privacy contained in Article 17 of the International Covenant on Civil and Political Rights (ICCPR). This is because licensed manufacturers must provide the Commissioner with an excise return in the approved form and provide a range of personal information to the ATO.
4.21 This reporting obligation is compatible with the prohibition concerning privacy, as it is neither arbitrary nor unlawful. Only the minimum amount of information necessary to assess the amount of excise duty payable on the manufactured tobacco by the licensed manufacturer during the relevant period will be collected.
4.22 The United Nations Human Rights Committee has stated, in their General Comment No. 16, that:
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- 'unlawful means that no interference can take place except in cases envisaged by the law. Interference authorized by States can only take place on the basis of law, which must itself comply with the provisions, aims and objectives of the Covenant [the ICCPR]'; and
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- 'the concept of arbitrariness is intended to guarantee that even interference provided for by law should be in accordance with the provisions, aims and objectives of the Covenant and should be, in any event, reasonable in the particular circumstances'.
4.23 The objective of requiring information from the licensed manufacturer is to calculate the amount of excise duty payable.
4.24 Taxpayer information held by the Commissioner is subject to strict confidentiality rules that prohibit tax officials from making records or disclosing this information unless a specific legislative exemption applies.
4.25 To the extent that the amendments engage Article 17, they do so appropriately. This is because the collection of the information is required in order to calculate the amount of excise duty payable, and that information's use or disclosure is limited to where a specific legislative exemption applies.
Conclusion
4.26 These Bills are compatible with Article 17 of the ICCPR on the basis that its engagement of the right to privacy will neither by unlawful nor arbitrary. The Bills therefore comply with the relevant provisions, aims and objectives of the ICCPR.